An introduction to UK taxes

The UK tax system

The Institute for Fiscal Studies (IFS) collates information on the UK’s tax system on its Taxlab site: https://ifs.org.uk/taxlab/; in particular,

• Data on individual taxes in ‘Taxes explained’
• Briefing material on basic trends in ‘Key Questions’, including
  • Where does the government get its money?
  • How have government revenues changed over time?
  • How do UK tax revenues compare internationally?

An older survey of the tax system is provided by, Thomas Pope & Tom Waters, A survey of the UK tax system: IFS Briefing Note BN09, November 2016.

Tax rates and allowances

Rates and allowances for taxes and benefits for 2021/22 and 2022/23 are set out in Annex A to HM Treasury, Overview of tax legislation and rates, 27 October March 2021.

The Library publishes a short paper each year summarising rates and allowances for direct taxes (income tax, national insurance contributions, capital gains tax, and inheritance tax). The edition for the 2021/22 tax year, is Commons Library briefing CBP9146, 6 April 2021.

The Budget and the Finance Bill

Each year the Chancellor of the Exchequer presents the Budget, which contains all the tax measures for the year ahead. Traditionally the Budget has been in March, before the start of the tax year on 6 April. The statutory provisions to give effect to these tax measures are set out in a single Bill: the annual Finance Bill.

It has been the practice in recent years for Chancellors to make tax announcements twice a year, using the Pre-Budget Report or Autumn Statement as a second fiscal event. In November 2016 the then Chancellor Philip Hammond announced that from autumn 2017 the Government would present a single autumn Budget, to allow for greater Parliamentary scrutiny of Budget measures ahead of their implementation. Following the first Autumn Budget on 22 November 2017, the Government published details of a revised annual Budget timetable (HM Treasury, The new Budget timetable and the tax policy making process, 6 December 2017).

Over the last two years this timetable has been affected by the timing of the 2019 General Election and the Covid-19 pandemic. In the first case the Autumn 2019 Budget was postponed to 11 March 2020. In the second case, the Autumn 2020 Budget was postponed to 3 March 2021. Subsequently the Chancellor presented the Autumn Budget, and the Government’s Spending Review 2021, on 27 October 2021.

A Commons Library briefing, The Budget and the annual Finance Bill, explains how Parliament debates the Budget and scrutinises the Finance Bill, and how the timing of a General Election can affect this procedure.

Tax statistics

HM Revenue & Customs collates date on taxes receipts and taxpayers, as well as benefits and credits, on its Statistics pages. As part of this, HMRC receipts shows the amounts raised from all national taxes. Two other sections of these pages provide details of the cost of basic tax reliefs, and illustrative changes to both direct and indirect taxes. Statistics on VAT, excise duties, and other indirect taxes are collated on this site as well, but data on receipts from National Insurance contributions is presented separately in the annual accounts of the National Insurance Fund.

In 2010 the Office for Budget Responsibility (OBR) was established to provide independent and authoritative analysis of the UK’s public finances.  The OBR’s projections for tax receipts over the next five years, are in its Economic & Fiscal Outlook, CP 545, October 2021 (see Table 3.4).  In July 2020 the OBR published its most recent Fiscal sustainability report – its analysis of UK public finances beyond this medium-term horizon. In July 2021 it published its third Fiscal Risks report – a review of risks from the economy and financial system, to tax revenues, public spending and the balance sheet over the long-term.

As part of the data it regularly publishes, the OBR has a historical database of Budget & Autumn Statement policy measures since 1970. The OBR also collates data on individual taxes and elements of public spending.

Further to this, an overview of tax statistics, including recent trends, forecasts, and distribution of taxpayers, is provided in a Commons Library briefing: Tax statistics: an overview.

Tax advice

HMRC provide detailed guidance for taxpayers, and for professional advisers & agents, on Gov.uk – including a series of pages on individual aspects of the tax system, including: Income Tax, Capital Gains Tax, Corporation Tax, Inheritance Tax, VAT, Advice for Accountants and Advisers and Appeals against HMRC decisions.

Detailed technical guidance in series of HMRC Manuals which cover both scope of taxes and departmental practice.

HMRC also publish a list of contact addresses and helplines, and guidance for those who have additional needs.

Three other useful sources of tax advice are:

• Low Incomes Tax Reform Group : provides help for pensioners, students, disabled persons & carers, migrants, and workers on low incomes. Notably LITRG publish detailed guidance on making complaints about HMRC, checking one’s tax code, as well as tax and related benefit guidance related to Covid-19.
• TaxAid : is a UK charity providing free tax advice to people who cannot afford to pay a professional adviser.  The charity’s website has a series of pages offering advice for taxpayers, including guidance on tax debt.
• Working with HMRC: guide for MPs. This is a guide from HMRC explaining the range of services it provides MPs and their staff to support them in dealing with tax-related enquiries from constituents. This is available on the Library’s site, for users with a Parliamentary login. It is not available to members of the public.

This information should not be relied upon as legal or professional advice. Read the disclaimer.